CAPITAL BANK CORPORATION 
By
"The past five quarters, beginning with the fourth quarter of 2007 through
today, have been the most challenging for the banking industry since the Great
Depression," stated
Partially contributing to lower profitability during 2008 was a decline in
net interest income. Net interest income decreased
Loans grew by
Due to continued weakening in the overall economy, asset quality remained
a major focus throughout 2008. While our markets remain some of the most
resilient in the country, the Company took steps to increase the provision for
loan losses in the fourth quarter in response to some softening experienced in
the loan portfolio as reflected by certain credit quality ratios. Past due
loans as a percent of total loans increased to 1.09% at
Provision for loan losses increased
Noninterest income increased
"Our noninterest income improvement strategies, which were implemented early in the second quarter, continue to show success," stated Mr. Yarber. "These strategies are based on fee collection efforts, restructured pricing and innovative product enhancements, including our Smart Checking product. Capital Bank remains committed to providing our customers with value added products and services that also allow our shareholders to benefit from a greater diversity of revenue-generating services. Most recently we announced that we will expand our mortgage origination staff to assist customers with either the purchase or refinancing of their primary residence."
Noninterest expense increased from
Capital Bank Corporation, headquartered in
Information in this press release contains forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially, including without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates, and the effects of competition. Additional factors that could cause actual results to differ materially are discussed in Capital Bank Corporation's filings with the Securities and Exchange Commission, including without limitation its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. Capital Bank Corporation does not undertake a duty to update any forward-looking statements in this press release.
CAPITAL BANK CORPORATION
Summary of Operations
(Unaudited) Three Months Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
(In thousands except
per share data)
Interest income $ 20,088 $ 23,840 $ 85,020 $ 94,537
Interest expense 10,156 12,875 42,424 50,423
Net interest income 9,932 10,965 42,596 44,114
Provision for loan losses 1,701 3,099 3,876 3,606
Net interest income after
provision for loan losses 8,231 7,866 38,720 40,508
Noninterest income 2,297 2,455 11,051 9,511
Noninterest expense 11,095 10,401 41,471 39,037
Income (loss) before taxes (567) (80) 8,300 10,982
Income tax expense (benefit) (500) (125) 1,973 3,124
Net income (loss) $ (67) $ 45 $ 6,327 $ 7,858
Earnings (loss) per common
share - basic $ (0.02) $ - $ 0.55 $ 0.69
Earnings (loss) per common
share - fully diluted $ (0.02) $ - $ 0.54 $ 0.68
Weighted average
shares outstanding:
Basic 11,309 11,252 11,303 11,424
Fully diluted 11,325 11,316 11,426 11,493
End of Period Balances
(Unaudited) 2008 2007
December 31 September 30 June 30 March 31 December 31(a)
(Dollars in
thousands
except per
share data)
Total
assets $1,716,198 $1,594,402 $1,592,034 $1,575,301 $1,517,603
Investment
securities 278,138 244,310 246,468 258,086 259,116
Loans
(gross)* 1,254,368 1,194,149 1,178,157 1,150,497 1,095,107
Allowance
for loan
losses 14,795 14,017 13,910 13,563 13,571
Total
earning
assets 1,533,354 1,444,727 1,435,020 1,419,174 1,362,048
Deposits 1,315,314 1,197,721 1,182,615 1,150,897 1,098,698
Shareholders'
equity 210,525 166,521 165,731 167,967 164,300
Book value
per common
share $15.06 $14.83 $14.76 $14.95 $14.71
Tangible book
value per
common share $8.92 $9.26 $9.16 $9.33 $9.04
(a) Derived from audited consolidated financial statements
*Includes loans held for sale
Average Quarterly Balances
(Unaudited) 2008 2007
December 31 September 30 June 30 March 31 December 31
(Dollars in
thousands)
Total
assets $1,620,817 $1,574,810 $1,578,357 $1,555,986 $1,492,563
Investment
securities 246,658 245,408 256,406 256,538 242,272
Loans
(gross)* 1,213,027 1,176,491 1,166,795 1,142,728 1,090,801
Total
earning
assets 1,473,422 1,425,516 1,429,301 1,407,345 1,347,727
Deposits 1,238,343 1,164,362 1,148,671 1,139,106 1,066,438
Shareholders'
equity 171,227 166,570 170,945 167,610 166,222
*Includes loans held for sale
CAPITAL BANK CORPORATION
Quarterly Results
(Unaudited) 2008 2007
December 31 September 30 June 30 March 31 December 31
(In thousands
except per
share data)
Net interest
income $9,932 $10,827 $10,928 $10,909 $10,965
Provision for
loan losses 1,701 760 850 565 3,099
Net interest income
after provision for
loan losses 8,231 10,067 10,078 10,344 7,866
Noninterest income 2,297 3,267 2,974 2,227 2,455
Noninterest expense 11,095 10,517 9,968 9,605 10,401
Income (loss)
before taxes (567) 2,817 3,084 2,966 (80)
Income tax
expense (benefit) (500) 805 869 799 (125)
Net income (loss) $(67) $2,012 $2,215 $2,167 $45
Earnings (loss)
per common
share - basic $(0.02) $0.18 $0.20 $0.19 $-
Earnings (loss)
per common
share - fully
diluted $(0.02) $0.18 $0.20 $0.19 $-
Weighted average
shares outstanding:
Basic 11,309 11,302 11,310 11,289 11,252
Fully diluted 11,325 11,313 11,324 11,306 11,316
Quarterly Net Interest Margin*
(Unaudited) 2008 2007
December 31 September 30 June 30 March 31 December 31
Yield on earning
assets 5.51% 5.94% 6.09% 6.60% 7.17%
Cost of interest
bearing liabilities 3.05 3.12 3.24 3.76 4.34
Net interest spread 2.46 2.82 2.85 2.83 2.83
Net interest margin 2.78 3.13 3.18 3.23 3.38
*Annualized and on a fully taxable equivalent basis
Nonperforming Assets
(Unaudited) 2008 2007
December 31 September 30 June 30 March 31 December 31(a)
(Dollars in
thousands)
Commercial $4,682 $4,343 $3,650 $2,919 $4,489
Construction 3,843 1,570 418 230 562
Consumer 92 25 42 61 28
Home equity 275 275 515 579 397
Residential
mortgage 223 198 582 463 506
Total
nonperforming
loans 9,115 6,411 5,207 4,252 5,982
Other real
estate owned 1,347 1,019 663 890 1,571
Total
nonperforming
assets $10,462 $7,430 $5,870 $5,142 $7,553
Nonperforming assets include loans that are 90 days or more past due or in nonaccrual status and other real estate owned.
(a) Derived from audited consolidated financial statements
CAPITAL BANK CORPORATION
Key Ratios
(Unaudited) 2008 2007
December 31 September 30 June 30 March 31 December 31
(Dollars in
thousands)
Past due loans $13,642 $8,933 $9,239 $9,380 $10,769
Past due loans
as a percent of
total loans 1.09% 0.75% 0.78% 0.82% 0.98%
Net charge-offs $1,768 $653 $503 $573 $2,894
Net charge-offs
as a percent of
average loans
(annualized) 0.58% 0.22% 0.17% 0.20% 1.06%
Allowance for
loan losses as
a percent of total
loans 1.18% 1.17% 1.18% 1.18% 1.24%
Nonperforming assets
as a percent of total
assets 0.61% 0.47% 0.37% 0.33% 0.50%
Allowance for loan
losses as a percent
of nonperforming
loans 162% 219% 267% 319% 227%
CAPITAL BANK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2008 and 2007
December 31, 2008 December 31, 2007
(Dollars in thousands
except share data) (Unaudited)
Assets
Cash and due from banks:
Interest earning $719 $7,815
Noninterest earning 53,607 32,347
Federal funds sold and
short term investments 129 10
Total cash and
cash equivalents 54,455 40,172
Investment securities -
available for sale,
at fair value 272,944 249,094
Investment securities -
held to maturity, at
amortized cost 5,194 10,022
Loans - net of unearned
income and deferred fees 1,254,368 1,095,107
Allowance for loan losses (14,795) (13,571)
Net loans 1,239,573 1,081,536
Premises and equipment, net 24,640 23,863
Bank-owned life insurance 22,368 21,589
Goodwill and deposit premium, net 69,002 63,345
Deferred income tax 6,163 5,829
Accrued interest receivable 6,225 7,789
Other assets 15,634 14,364
Total assets $1,716,198 $1,517,603
Liabilities
Deposits:
Demand, noninterest bearing $125,281 $114,780
Savings and interest
bearing checking 173,711 151,698
Money market deposit accounts 212,780 229,560
Time deposits less than $100,000 509,231 370,416
Time deposits $100,000 and greater 294,311 232,244
Total deposits 1,315,314 1,098,698
Repurchase agreements and
federal funds purchased 15,010 45,295
Borrowings 132,000 163,347
Subordinated debentures 30,930 30,930
Other liabilities 12,419 15,033
Total liabilities 1,505,673 1,353,303
Commitments and contingencies
Shareholders' Equity
Preferred stock, $1,000 par value
100,000 and 0 shares authorized;
41,279 and 0 issued and outstanding
as of December 31, 2008 and 2007,
respectively (liquidation preference
of $41,279, 000 as of December 31,
2008) 39,839 -
Common stock, no par value;
20,000,000 shares authorized;
11,238,085 and 11,169,777 shares
issued and outstanding as of December
31, 2008 and 2007, respectively 139,209 136,154
Retained earnings 30,591 27,985
Accumulated other comprehensive income 886 161
Total shareholders' equity 210,525 164,300
Total liabilities and
shareholders' equity $1,716,198 $1,517,603
CAPITAL BANK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Twelve Month Periods Ended December 31, 2008 and 2007
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
(Dollars in thousands
except per share data)
Interest income:
Loans and loan fees $17,009 $20,835 $72,494 $82,066
Investment securities:
Taxable interest income 2,319 1,889 8,935 7,731
Tax-exempt interest income 734 825 3,169 3,237
Dividends 1 122 294 451
Federal funds and other
interest income 25 169 128 1,052
Total interest income 20,088 23,840 85,020 94,537
Interest expense:
Deposits 8,107 9,929 33,042 39,700
Borrowings and
repurchase agreements 2,049 2,946 9,382 10,723
Total interest expense 10,156 12,875 42,424 50,423
Net interest income 9,932 10,965 42,596 44,114
Provision for loan losses 1,701 3,099 3,876 3,606
Net interest income
after provision for
loan losses 8,231 7,866 38,720 40,508
Noninterest income:
Service charges and
other fees 1,054 1,011 4,459 3,780
Mortgage fees and revenues 237 336 1,005 1,981
Other loan fees 251 124 1,143 555
Brokerage fees 162 192 732 601
Bank card services 322 309 1,332 1,064
Bank-owned life insurance 135 218 952 841
Net gain (loss) on sale of
investment securities - (49) 249 (49)
Gain on sale of branch (52) - 374 -
Other 188 314 805 738
Total noninterest income 2,297 2,455 11,051 9,511
Noninterest expense:
Salaries and employee
benefits 5,771 4,553 21,255 19,674
Occupancy 1,161 1,844 4,458 4,897
Furniture and equipment 817 933 3,135 2,859
Data processing and
telecommunications 610 436 2,135 1,637
Advertising 515 450 1,515 1,442
Office expenses 339 325 1,317 1,389
Professional fees 466 420 1,479 1,289
Business development
and travel 360 308 1,393 1,217
Amortization of deposit
premiums 267 298 1,037 1,198
Miscellaneous loan
handling costs 278 198 848 743
Directors fees 38 (145) 740 424
Insurance (61) 172 275 435
FDIC deposit insurance 243 71 685 270
Other 291 538 1,199 1,563
Total noninterest
expense 11,095 10,401 41,471 39,037
Net income (loss)
before tax expense
(benefit) (567) (80) 8,300 10,982
Income tax expense (benefit) (500) (125) 1,973 3,124
Net income (loss) $(67) $45 $6,327 $7,858
Net income (loss)
applicable to preferred
shareholder 124 - 124 -
Net income (loss)
applicable to common
shareholders $(191) $45 $6,203 $7,858
Earnings (loss) per common
share - basic $(0.02) $- $0.55 $0.69
Earnings (loss) per common
share - diluted $(0.02) $- $0.54 $0.68
CAPITAL BANK CORPORATION
Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Three Months Ended
Tax Equivalent Basis (1)
December 31, 2008
Amount Average
(Dollars in thousands) Average Balance Earned Rate
Assets
Loans receivable: (2)
Commercial $1,052,172 $14,719 5.55 %
Consumer 47,537 888 7.41
Home equity 89,125 1,047 4.66
Residential mortgages 24,193 355 5.87
Total loans 1,213,027 17,009 5.56
Investment securities (3) 246,658 3,430 5.56
Federal funds sold and other interest
on short-term investments 13,737 25 0.72
Total interest-earning assets 1,473,422 $20,464 5.51 %
Cash and due from banks 25,018
Other assets 136,387
Allowance for loan losses (14,010)
Total assets $1,620,817
Liabilities and Equity
Savings deposits $27,948 $11 0.16 %
Interest-bearing demand deposits 336,011 1,363 1.61
Time deposits 758,491 6,733 3.52
Total interest-bearing deposits 1,122,450 8,107 2.87
Borrowed funds 145,962 1,605 4.36
Subordinated debt 30,930 424 5.44
Repurchase agreements and fed funds
purchased 22,050 20 0.34
Total interest-bearing liabilities 1,321,392 $10,156 3.05 %
Noninterest-bearing deposits 115,893
Other liabilities 12,305
Total liabilities 1,449,590
Shareholders' equity 171,227
Total liabilities and shareholders'
equity $1,620,817
Net interest spread (4) 2.46 %
Tax equivalent adjustment $376
Net interest income and net interest
margin (5) $10,308 2.78 %
September 30, 2008
Amount Average
(Dollars in thousands) Average Balance Earned Rate
Assets
Loans receivable: (2)
Commercial $1,018,947 $15,469 6.02 %
Consumer 46,480 875 7.47
Home equity 84,441 1,133 5.32
Residential mortgages 26,623 398 5.98
Total loans 1,176,491 17,875 6.03
Investment securities (3) 245,408 3,452 5.63
Federal funds sold and other
interest on short-term investments 3,617 15 1.65
Total interest-earning assets 1,425,516 $21,342 5.94 %
Cash and due from banks 25,554
Other assets 137,792
Allowance for loan losses (14,052)
Total assets $1,574,810
Liabilities and Equity
Savings deposits $30,169 $30 0.39 %
Interest-bearing demand deposits 342,575 1,802 2.09
Time deposits 679,162 6,005 3.51
Total interest-bearing deposits 1,051,906 7,837 2.96
Borrowed funds 174,735 1,786 4.06
Subordinated debt 30,930 407 5.22
Repurchase agreements and fed funds
purchased 27,039 74 1.09
Total interest-bearing liabilities 1,284,610 $10,104 3.12 %
Noninterest-bearing deposits 112,456
Other liabilities 11,174
Total liabilities 1,408,240
Shareholders' equity 166,570
Total liabilities and shareholders'
equity $1,574,810
Net interest spread (4) 2.82 %
Tax equivalent adjustment $411
Net interest income and net interest
margin (5) $11,238 3.13 %
December 31, 2007
Amount Average
(Dollars in thousands) Average Balance Earned Rate
Assets
Loans receivable: (2)
Commercial $933,847 $17,821 7.57 %
Consumer 43,042 895 8.25
Home equity 78,221 1,547 7.85
Residential mortgages 35,691 572 6.36
Total loans 1,090,801 20,835 7.58
Investment securities (3) 242,272 3,347 5.48
Federal funds sold and other interest
on short-term investments 14,654 169 4.58
Total interest-earning assets 1,347,727 $24,351 7.17 %
Cash and due from banks 27,617
Other assets 130,340
Allowance for loan losses (13,121)
Total assets $1,492,563
Liabilities and Equity
Savings deposits $32,800 $56 0.68 %
Interest-bearing demand deposits 350,580 2,749 3.11
Time deposits 568,604 7,124 4.97
Total interest-bearing deposits 951,984 9,929 4.14
Borrowed funds 156,853 2,010 5.08
Subordinated debt 30,930 597 7.66
Repurchase agreements and fed funds
purchased 38,499 339 3.49
Total interest-bearing liabilities 1,178,266 $12,875 4.34 %
Noninterest-bearing deposits 114,454
Other liabilities 33,621
Total liabilities 1,326,341
Shareholders' equity 166,222
Total liabilities and shareholders'
equity $1,492,563
Net interest spread (4) 2.83 %
Tax equivalent adjustment $511
Net interest income and net interest
margin (5) $11,476 3.38 %
(1) The tax equivalent basis is computed using a blended federal and state tax rate of approximately 34%.
(2) Loans receivable include nonaccrual loans for which accrual of interest has not been recorded.
(3) The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.
(4) Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average interest-earning assets.
CAPITAL BANK CORPORATION
Average Balances, Interest Earned or Paid, and Interest Yields/Rates
For the Years Ended December 31, 2008 and 2007 (Unaudited)
Tax Equivalent Basis (1)
December 31, 2008
Amount Average
(Dollars in thousands) Average Balance Earned Rate
Assets
Loans receivable: (2)
Commercial $1,017,157 $62,678 6.15 %
Consumer 46,767 3,542 7.55
Home equity 83,511 4,602 5.5
Residential mortgages 27,435 1,672 6.09
Total Loans 1,174,870 72,494 6.15
Investment securities (3) 251,224 14,026 5.58
Federal funds sold and other interest
on short-term investments 7,888 128 1.62
Total interest-earnings assets 1,433,981 $86,648 6.03 %
Cash and due from banks 25,882
Other assets 136,559
Allowance for loan losses (13,846)
Total assets $1,582,576
Liabilities and Equity
Savings deposits $29,756 $122 0.41 %
Interest-bearing demand deposits 336,899 6,655 1.97
Time deposits 691,140 26,265 3.79
Total interest-bearing deposits 1,057,795 33,042 3.12
Borrowed funds 168,501 7,234 4.28
Subordinated debt 30,930 1,761 5.68
Repurchase agreements and fed funds
purchased 29,929 387 1.29
Total interest-bearing liabilities 1,287,156 $42,424 3.29 %
Noninterest-bearing deposits 114,982
Other liabilities 11,352
Total liabilities 1,413,489
Shareholders' equity 169,087
Total liabilities and shareholders'
equity $1,582,576
Net interest spread (4) 2.74 %
Tax equivalent adjustment $1,628
Net interest income and net interest
margin (5) $44,224 3.08 %
December 31, 2007
Amount Average
(Dollars in thousands) Average Balance Earned Rate
Assets
Loans receivable: (2)
Commercial $877,876 $69,203 7.88 %
Consumer 40,579 3,459 8.52
Home equity 80,177 6,682 8.33
Residential mortgages 43,227 2,722 6.3
Total Loans 1,041,859 82,066 7.88
Investment securities (3) 246,736 13,476 5.46
Federal funds sold and other interest
on short-term investments 20,417 1,052 5.15
Total interest-earnings assets 1,309,012 $96,594 7.38 %
Cash and due from banks 27,740
Other assets 129,629
Allowance for loan losses (13,307)
Total assets $1,453,074
Liabilities and Equity
Savings deposits $33,559 $194 0.58 %
Interest-bearing demand deposits 359,373 12,165 3.38
Time deposits 568,604 27,341 4.81
Total interest-bearing deposits 961,536 39,700 4.13
Borrowed funds 134,590 6,920 5.14
Subordinated debt 30,930 2,387 7.72
Repurchase agreements and fed funds
purchased 34,689 1,416 4.08
Total interest-bearing liabilities 1,161,745 $50,423 4.34 %
Noninterest-bearing deposits 111,829
Other liabilities 14,940
Total liabilities 1,288,514
Shareholders' equity 164,560
Total liabilities and shareholders'
equity $1,453,074
Net interest spread (4) 3.04 %
Tax equivalent adjustment $2,057
Net interest income and net interest
margin (5) $46,171 3.53 %
(1) The tax equivalent basis is computed using a blended federal and state tax rate of approximately 34%.
(2) Loans receivable include nonaccrual loans for which accrual of interest has not been recorded.
(3) The average balance for investment securities excludes the effect of their mark-to-market adjustment, if any.
(4) Net interest spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average interest-earning assets.
SOURCE Capital Bank Corporation
